One product produced and sold by Backstroms Backyard Products is a water fountain for which 2019 projections are as follows:

Projected volume in units 100,000

Sales price per unit $75

Variable production cost per unit $30

Variable selling cost per unit $15

Fixed production cost $800,000

Fixed selling and administration costs $400,000

1. Compute the projected pretax profit to be earned on the water fountains in 2019. (Pretax profit will be 1,800,000 show your work.)
2. Management estimated that unit volume could be increased by 25% if the sales price was cut by 15%. How would such a change affect the profit level projected in (a) above. (Provide the pretax profit and explain the change.)
3. Rather than cutting the sales price, management is considering holding the sales price at the projected level and increasing advertising by $185,000. Such a change would increase volume by 30%. How would the level of profit under this alternative compare to the profit projected in (a). (Provide the pretax profit and explain the change. )